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U.S. JOBLESS RATE IN A JUMP TO 4.9%; BUSH VOWS TO ACT

The nation's unemployment rate jumped sharply in August to 4.9 percent from 4.5 percent in July, the biggest one-month rise since the spring of 1995, dashing hopes that the bleak economic climate was starting to improve.

The 4.9 percent jobless rate in August, according to the government's Bureau of Labor Statistics, was the highest since mid-1997. Businesses eliminated more than 100,000 jobs last month, suggesting that the economy remained at risk of falling into a recession. And companies, in an effort to halt steep profit declines, made more cuts this summer in the hours their employees worked.

''The economy is facing bigger threats than we had thought,'' said Jim Glassman, a senior economist at J. P. Morgan Chase. ''It's a very weak picture.''

The grim economic news prompted a hastily arranged appearance by President Bush on the White House grounds yesterday, where he sought to assure the public he was aware of the human toll the job losses were taking. [Page A9.]

''I want the American people to know we're deeply concerned about the unemployment rates and we intend to do something about it,'' said Mr. Bush, who has long been aware that the nation's last recession at least in part caused his father to lose his 1992 bid for re-election.

Mr. Bush called for a ''growth plan'' to reverse the downturn, but offered no specifics beyond pushing policies that he has advocated before. He urged Congress to move on his proposals for increased energy production and to give him more leeway in negotiating international trade agreements.

The job figures prompted a broad sell-off on Wall Street, and the Standard & Poor's 500-stock index fell to its lowest level in almost three years. The dollar also dropped against the euro, and economists said that the Federal Reserve was now likely to keep cutting interest rates until signs of a rebound emerge. [Page C1.]

A month ago, the Labor Department had offered some reason for optimism, finding that manufacturers in July cut the fewest jobs in almost a year and reporting a rise in the number of people in the labor force -- those with a job or actively seeking one. But the August numbers erased nearly all of the hopeful signs.

Manufacturing companies -- hurt badly by the plunge in business investment and by the strong dollar, which makes it harder to compete against foreign goods -- accounted for the entire August decline in jobs.

Since early last summer, factories have cut more than one million jobs, or 5.4 percent of their payrolls, and fewer people now work in a manufacturing plant than at any time since 1964. The South and the Midwest have been hardest hit by the manufacturing slump.

Companies in the vast services sector continued to add workers, but at a much slower pace than in recent years. Businesses that are most affected by a slowdown, like restaurants, hotels and movie theaters, cut jobs in August, while doctors' offices, hospitals and other health-care companies added positions.

Most government and Wall Street economists still predict that a rebound is coming soon, though many concede that they have been overly optimistic so far this year. They now say that the $38 billion in tax rebates gives consumers more money to spend -- a point the White House sought to emphasize as well. They also say that the sharp decline in business inventories has set the stage for production increases and that a recent rise in manufacturing orders presages a turnaround.

But they acknowledged that risks remain, chief among them the continued decline in corporate profits that could cause companies to make even deeper jobs cuts. Last month, for example, the Ford Motor Company, in its second major cost-cutting attempt this year, said it would eliminate 5,000 of its 50,000 jobs.

More job reductions could cause consumers to spend less money and leave the economy in a more severe slump. Already, two-thirds of Americans believe that the economy is declining, and most say they plan to save their tax rebate or use it to pay off debt, according to the most recent consumer survey by the University of Michigan.

Even if a rebound does begin in coming weeks, joblessness is likely to continue rising for many months because companies usually do not start rebuilding their workforces until they are confident that business has picked up.

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But the report offered little indication that the staff cuts companies have made have gone deep enough to match the declines in sales. The average workweek stayed at 34.1 hours, its lowest two-month average since the government began keeping the statistic almost 40 years ago.

''Companies that had been trying to avoid layoffs are doing it anyway,'' Mr. Glassman, the Morgan Chase analyst, said. ''And despite the cutting they've done, they're not getting ahead of the curve.''

The one aspect of the report that gave economists some comfort was the government's revision of its June and July payroll numbers. During those months, the economy was not as weak as the Labor Department had said in its initial estimates: companies and government offices eliminated 86,000 jobs, not 135,000.

In all, the private and public sectors accounted for 132.3 million jobs last month, down 113,000 from July and more than 300,000 from the March peak, according to the Labor Department's payroll survey. Its household survey -- which is used to measure the unemployment rate -- offered an even more pessimistic picture, indicating that 600,000 fewer people are working than at the start of the year.

In either case, the situation is far different from the previous five years, when the economy, on average, added 2.8 million jobs a year.

In the second half of 2000, manufacturers began to suffer as companies -- having decided many of their investments in new buildings, equipment and software would not be profitable -- cut back. With stocks falling and layoffs rising, consumer spending slowed somewhat but has remained strong enough so far to keep the economy barely growing.

By historical standards, unemployment is still relatively low, which has helped keep wages rising. Wages rose at a 3.4 percent annual rate last month, compared with the rise of 3.6 percent averaged over the last year.

In the second quarter, the United States economy grew at an annual rate of just 0.2 percent, according to the Commerce Department's most recent estimate. Many people consider a recession to consist of two consecutive quarters of contraction. Analysts said it was still too early to tell whether the second and third quarters of this year would fall into that category once the government updates its statistics, but yesterday's jobs report increased the chances of that.

The Federal Reserve has tried to revive the economy by repeatedly cutting short-term interest rates this year in an effort to bolster confidence and make it cheaper for businesses and consumers to borrow money. Investors now expect the Fed to reduce its benchmark short-term rate, now at 3.5 percent, by at least another quarter-point and perhaps even by a half-point, when it next meets in October.

Earlier in the week, after a survey of manufacturing executives hinted that industrial output might be on the verge of improving, most investors thought that even a quarter-point cut was unlikely. But yesterday the government said that factories cut another 141,000 jobs, their biggest reduction since July 1998.

Aggravating the weakness in the private sector, government agencies -- local, state and federal -- stopped adding to their payrolls in August. In the coming months, analysts said, government employment is unlikely to rise significantly because the slowdown has cut tax revenues, leaving less money for new programs.

Already, virtually every measure of the labor market has weakened. The average length of unemployment rose to 13.3 weeks, from 12.5 in July.

The unemployment rate for teenagers increased to 16.1 percent, from 14.8 percent in July. And the unemployment rates for blacks, 9.1 percent; Hispanics, 6.3 percent; and whites, 4.3 percent, all rose.

More people stopped looking for work last month than in July. Only those actively looking for a job count in the unemployment rate.

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A version of this article appears in print on September 8, 2001, on Page A00001 of the National edition with the headline: U.S. JOBLESS RATE IN A JUMP TO 4.9%; BUSH VOWS TO ACT. Order Reprints|Today's Paper|Subscribe